3 Group reported a solid rise in annual results in 2017, despite a small drop in its customer base. The company blamed the customer losses on new definitions for inactive subscribers after the merger of Wind and Tre in Italy and "intense competition for lower value customers" in Wind Tre’s base.
The joint venture still contributed to higher financial results, thanks to the inclusion of Wind for a full year as opposed to two months in 2016. 3 Group's revenues rose 13 percent to HKD 70.734 billion in 2017, and EBITDA increased 28 percent to HKD 24.337 billion. The EBITDA margin improved to 41 percent from 37 percent in 2016. Excluding currency effects, service revenues rose 16 percent to HKD 56.002 billion, helping offset a small drop in hardware revenue.
All countries in the group continued to deliver positive free cash flow, defined as EBITDA less capital expenditure, in 2017. Excluding Italy, group capex jumped to HKD 7.883 billion from HKD 5.858 billion in 2016, as the company said it invested in new systems to help move to a lower operating cost model. Operating costs on the same basis were up 6 percent year-on-year.
The mobile operator ended the year with 44.776 million active customers including Italy, down 1 percent from June 2017 and 3 percent less than at the end of 2016. In addition to Italy, Sweden and Austria showed small annual declines, while the UK base rose by 10 percent over 2017 and Denmark was up 6 percent.
Postpaid made up 44 percent of the base, versus 56 percent on prepaid. ARPU on a 12-month trailing basis fell 7 percent to EUR 15.25, with the postpaid figure at EUR 19.75 and prepaid at EUR 10.60. The company said it saw a 6 percent fall in average minutes per user, due mainly to the inclusion of Wind Tre, but total data traffic was up 62 percent to 2,321 PB in the year.
